Los Osos board members accused of misappropriation of funds

December 27, 2018

Jon-Erik Storm and Vicki Miledge

By KAREN VELIE

A community with some of the highest utility rates in San Luis Obispo County is embroiled in controversy after several current and former board members appear to have over-paid themselves, alleged misappropriations that for years went uncontested.

In December, the Los Osos Community Services District announced a midyear budget adjustment to account for a more than 41 percent increase in director pay. District staff then adjusted several other budget items to “balance the directors’ compensation increase,” according to a finance committee report.

In response to the report, local activist Julie Tacker sent in a public records request for two-years of itemized director compensation records, and found that several directors had been regularly charging the district in violation of the California Government Code. Tacker also discovered that two other directors appear to have made several errors in their requests for compensation.

On Dec. 21, Tacker sent the district a letter detailing the alleged misappropriations of monies and asking the district to “recover the funds.”

The California Government Code describes in detail which meetings board members can seek compensation for attending and other requirements. For example, the district can pay board members no more than $100 compensation for a “day of service.” A day of service is described as attending a district board meeting operated under the Ralph M. Brown Act, or attendance at a limited training session, or a public event or meeting, provided the board of directors had previously approved the member’s participation

But some members of the Los Osos Community Services District Board have sought and received compensation for more than one meeting in a day, for meeting with district staffers, for attending committee meetings as a member of the audience and for meeting privately with other board members – all without board direction.

Elected in Nov. 2016, Director Vicki Milledge has charged the board for attending committee meetings when she is not a member, for having private meetings with district employees and other board members, and for attending a variety of public events without prior board approval. During the past two years, Milledge has billed for and received $6,200 in questionable compensation.

Milledge admitted that she may have “made some mistakes,” but felt most of her charges were legitimate.

“Under my understanding of the bylaws, it is ok,” Milledge said. “Los Osos is unique in many ways.”

However, the district bylaws also require that directors receive compensation for only meetings that received prior approval from the board of directors.

Former director John Eric Storm resigned in March 2018 citing family issues. During 2017, Storm billed the district $3,500 in questionable charges for 35 “meetings” many of which he listed as Ad Hoc, meaning no more than two people meeting on a specific issue. These meetings were not previously approved by the board or held under the Brown Act, Tacker said.

At the end of each month, directors fill out and sign a “directors monthly request for compensation for meeting attendance” form that instructs signers to only seek money for meetings approved by the board of directors.

While most board members have not requested compensation for questionable meetings, two current directors appear to have erred once or twice in the past two years.

Shortly after being appointed to the board, in April 2018, Christine Womack charged the district for attending a finance committee meeting, even though she was not on the finance committee at the time. Womack has also charged to attend a Basin Management Committee meeting, a committee that was set up several years ago as a non-compensated board.

On one occasion, Chuck Cesena requested and received $200 for a day of meetings, double the legal limit.

Even though district staff adjusted several budget items to deal with the increased director compensation, it appears staff failed to question the legality of the increased compensation. General Manager Renee Osborne was unavailable for comment.

During the past 10 years, Tacker has uncovered multiple instances of misappropriation of public funds including a 2015 review of Los Osos records that showed former general manager Kathy Kivley had over paid herself. Kivley left the district shortly after Tacker discovered the financial issues.

Before that, Tacker’s research on Oceano Community Services District records led to an audit and the termination of former district general manager Tom Geaslen for overpaying himself. As part of a settlement agreement, Geaslen agreed to return $36,962 in over payments to the Oceano district.

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